The big problem with self-serve checkouts
<p><em><strong>Gary Mortimer is an Associate Professor at the Queensland University of Technology and Paula Dootson is a Research Fellow in the PwC Chair in Digital Economy at Queensland University of Technology.</strong></em></p>
<p>Self-checkouts in supermarkets <span style="text-decoration: underline;"><strong><a href="https://www.alliedmarketresearch.com/self-services-technologies-market" target="_blank">are increasing</a></strong></span> as businesses battle to reduce costs and increase service efficiency. But looking at the numbers, it <span style="text-decoration: underline;"><strong><a href="http://drum.lib.umd.edu/bitstream/handle/1903/9593/Andrews_umd_0117E_10632.pdf?sequence=1&isAllowed=y" target="_blank">isn’t clear</a></strong></span> that self-service is an easy win for businesses.</p>
<p>Self-checkouts <span style="text-decoration: underline;"><strong><a href="http://whitman.syr.edu/faculty-and-research/research/pdfs/BQ_Rev2_MS_May5.pdf" target="_blank">aren’t necessarily faster</a></strong></span> than other checkouts and don’t result in lower staff numbers. And there are indirect costs such as theft, reduced customer satisfaction and loyalty.</p>
<p>Worldwide, self-checkout terminals are <span style="text-decoration: underline;"><strong><a href="https://www.ncr.com/sites/default/files/white_papers/RET_SCO_wp.pdf" target="_blank">projected to increase</a></strong></span> from 191,000 in 2013 to 325,000 by 2019. A <span style="text-decoration: underline;"><strong><a href="https://www.ncr.com/sites/default/files/white_papers/RET_SCO_wp.pdf" target="_blank">survey of multiple countries</a></strong></span> found 90% of respondents had used self-checkouts, with Australia and Italy leading the way.</p>
<p>Employment in the Australian supermarket and grocery industry <span style="text-decoration: underline;"><strong><a href="http://clients1.ibisworld.com.au/reports/au/industry/keystatistics.aspx?entid=1834" target="_blank">went down for the first time in 2015-16</a></strong></span> and is projected to remain flat for a few years. But staff numbers are <span style="text-decoration: underline;"><strong><a href="http://clients1.ibisworld.com.au/reports/au/industry/industryoutlook.aspx?entid=1834" target="_blank">projected to rebound again</a></strong></span>, in part due to the need to curtail growing theft at self-checkouts.</p>
<p><strong>Social trends pushing self-checkout</strong></p>
<p>A couple of intertwining trends explain the rise of self-checkouts.</p>
<p>We visit our supermarkets more frequently than ever before, <span style="text-decoration: underline;"><strong><a href="https://markettrack.com/wp-content/uploads/2014/10/Driving-Shopper-Behavior-in-Grocery.pdf" target="_blank">two to three times per week in fact</a></strong></span>. This means our basket contains fewer items and being able to wander up to a self-checkout, with little to no wait time, has been an expedient way to shop.</p>
<p>Most shoppers <span style="text-decoration: underline;"><strong><a href="https://www.canstarblue.com.au/food-drink/stores/are-self-service-checkouts-easy-to-use/" target="_blank">consider</a></strong></span> self-checkouts fast and easy to use. This varies, though, with age – 90% of shoppers aged 18-39 found self-service checkouts easy to use, but only 50% of those over 60 said the same.</p>
<p>Shoppers also <span style="text-decoration: underline;"><strong><a href="http://cat10492.pbworks.com/w/file/fetch/65317090/205.full.pdf" target="_blank">gain value from taking control of the transaction</a></strong></span> – being able to ring up their own goods and pack them the way they want. A sense of control over their own shopping can lead to <span style="text-decoration: underline;"><strong><a href="https://repositorio-aberto.up.pt/bitstream/10216/82349/2/108365.pdf" target="_blank">greater customer satisfaction</a></strong></span> and <span style="text-decoration: underline;"><strong><a href="http://emeraldinsight.com/doi/pdfplus/10.1108/IJRDM-08-2015-0122" target="_blank">intent to use and re-use</a></strong></span> self-serve technology.</p>
<p><strong>The numbers behind self-checkouts</strong></p>
<p>Wages <span style="text-decoration: underline;"><strong><a href="http://www.pc.gov.au/inquiries/completed/retail-trade/report/retail-trade.pdf" target="_blank">represent around 9.5% of supermarket revenue</a></strong></span> in Australia, and reducing wages is <span style="text-decoration: underline;"><strong><a href="http://drum.lib.umd.edu/bitstream/handle/1903/9593/Andrews_umd_0117E_10632.pdf?sequence=1&isAllowed=y" target="_blank">one of the reasons proposed</a></strong></span> for the uptake of self-checkout.</p>
<p>But from a business perspective, moving from “staffed” checkouts to self-serve machines isn’t cheap. A typical setup <span style="text-decoration: underline;"><strong><a href="http://web.mit.edu/2.744/www/Project/Assignments/humanUse/lynette/2-About%20the%20machine.html" target="_blank">costs around US$125,000</a></strong></span>. On top of that there are the costs of integrating the machines with the technology already in place – the software and other systems used to track inventory and sales – and the ongoing costs of breakdowns and maintenance.</p>
<p>But the biggest direct cost to retailers of adopting self-service checkouts is theft. Retail crime in Australia costs the industry over <span style="text-decoration: underline;"><strong><a href="http://www.retailcouncil.com.au/_literature_52092/25082009_sydney_institute_speech" target="_blank">A$4.5 billion</a></strong></span> each year.</p>
<p>There is reason to believe that rates of theft are higher on self-service machines than at regular checkouts. A <span style="text-decoration: underline;"><strong><a href="http://www.alphagalileo.org/AssetViewer.aspx?AssetId=114179&CultureCode=en" target="_blank">study of 1 million transactions in the United Kingdom</a></strong></span> found losses incurred through self-service technology payment systems totalled 3.97% of stock, compared to just 1.47% otherwise. <span style="text-decoration: underline;"><strong><a href="http://www.emeraldinsight.com/doi/pdfplus/10.1108/IJRDM-05-2015-0065" target="_blank">Research shows</a></strong></span> that one of the drivers of this discrepancy is that everyday customers – those who would not normally steal by any other means – disproportionately steal at self-checkouts.</p>
<p><span style="text-decoration: underline;"><strong><a href="http://www.emeraldinsight.com/doi/full/10.1108/IJRDM-05-2015-0065" target="_blank">Studies also show</a></strong></span> that having a human presence around – in this case employees in the self-checkout area – increases the perceived risk of being caught, which reduces “consumer deviance”. This is why retailers have been adding staff to monitor customers, absorbing the additional losses, or passing them on to customers in an “<span style="text-decoration: underline;"><strong><a href="https://theconversation.com/from-fare-evasion-to-illegal-downloads-the-cost-of-defiance-27978" target="_blank">honesty tax</a></strong></span>”.</p>
<p><strong>Making self-checkouts work</strong></p>
<p>Dootson suggests people are less likely to steal from a human employee than an inanimate object. This is not only because they are more likely to get caught, but because they feel bad about it.</p>
<p>On the other hand, consumers have plenty of justifications to excuse self-checkout theft, which is leading to its <span style="text-decoration: underline;"><strong><a href="http://www.smh.com.au/business/retail/supermarket-selfservice-checkouts-risk-nomalising-theft-says-criminologist-20160719-gq98y1.html" target="_blank">normalisation</a></strong></span>.</p>
<p>To combat this, Paula Dootson is trying to use design to combat deviance. One of the ways is through <span style="text-decoration: underline;"><strong><a href="http://www.chairdigitaleconomy.com.au/wp-content/uploads/2016/03/Retail-5.0-Check-out-the-future.pdf" target="_blank">extreme personalisation of service</a></strong></span> to reduce customer anonymity. Anonymity is an undesirable outcome of removing employees and replacing them with technology.</p>
<p>Other ideas are to include <span style="text-decoration: underline;"><strong><a href="http://www.pnas.org/content/109/38/15197.abstract" target="_blank">moral reminders</a></strong></span> prior to the opportunity to lie or steal (such as simply <span style="text-decoration: underline;"><strong><a href="http://insights.ethisphere.com/moral-reminders-bad-apples-and-the-power-of-positive-examples/" target="_blank">reminding people to be honest</a></strong></span>), and to humanise the machines by encoding human characteristics to trigger empathy.</p>
<p>While businesses will <span style="text-decoration: underline;"><strong><a href="https://www.ncr.com/sites/default/files/white_papers/RET_SCO_wp.pdf" target="_blank">continue to broadly adopt self-service technologies</a></strong></span>, particularly within the retail sector, it will be important for retailers to take a holistic approach to implementation and loss prevention.</p>
<p>Self-service technology reduces front-line staffing costs and increases efficiency by redistributing displaced staff into other service-dominant areas of the business, but it creates unintended costs. These business costs can be direct, in the form of theft, but also indirect costs, such as reduced customer satisfaction and loyalty. This is something that some supermarkets are <span style="text-decoration: underline;"><strong><a href="http://www.adelaidenow.com.au/news/south-australia/the-supermarket-chain-that-said-no-to-selfserve-checkouts/news-story/536325c349116574bef19c6209aed94b" target="_blank">focusing on today</a></strong></span>.</p>
<p>Do you like to use self-serve checkouts?</p>
<p><em>Written by Gary Mortimer and Paula Dootson. Republished with permission of <a href="http://www.theconversation.com" target="_blank"><strong><span style="text-decoration: underline;">The Conversation</span></strong></a>.</em><img width="1" height="1" src="https://counter.theconversation.com/content/78593/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation"/></p>
